Want to start rent to rent - a few questions

Mojisola

szyblaszczyk wrote: »

listened to dozens podcasts

If you only listen to podcasts telling you it's a brilliant idea and easy to do, you won't be getting a clear picture.

Look at some of the negative information as well before deciding it's a good idea.

szyblaszczyk

Thank you very much eddddy - really appreciate it.

1. Honestly that's what I didn't know but my girlfriend just confirmed it. That's quite an big issue but she also says there are some exceptions about it but she doesn't know the details. Do you know more?
3. Do you mean HMO?
4. We have enough money and can share any financial info with potential landlord. We saved enough to convince landlords they can sleep well. And we both work full time.

We know it won't be easy to find suitable houses. We are prepared for it. I just don't like simple "don't do it" without any good reason except that it's risky.

eddddy wrote: »

Hi szyblaszczyk

Sometimes the people around here can be a little unfriendly!

Unlike many of the posters, I understand what you are trying to do, and I have been involved in these schemes in eastern European countries.

Unfortunately, in the UK, the 'rules' are different. Here are some examples:

1. Most landlords have mortgages (bank loans) on their properties. The banks won't allow the landlords to do 'rent-to-rent' schemes.

2. In the UK, landlords own their flats on leases. Almost all leases will not allow holiday lets or 'rent-to-rent'.

3. Landlords would need planning consent from the council to change a property from being a home to being a holiday let. (And many councils won't give consent.)

4. Landlords will see you as being very high risk, because you have no business history. They will worry that you won't pay the rent.


Therefore, I don't think your business has a very good chance of working in the UK. I think the only landlords you will find are 'bad landlords' who are prepared to break the rules and break the law.

00ec25

szyblaszczyk wrote: »

3. Do you mean HMO?

as I posted in #11, when you let a property to people on "holiday" that is classed as a very different type of business to letting a property to someone who will use it as their home.

Short stay lets are classed as a trading activity (rather than an investment activity) and are both taxed differently and, as mentioned, viewed differently by councils. Short term lets can result in lots of people coming and going, that alters the character of an area, and therefore is of interest to local councils who may (or may not) class it as needing a change of use of the property. Therefore one that needs planning permission, because it could operate just like a hotel, and other local residents may well object to that.

as a totally separate issue, the question of HMO may also need to be considered. If you let the entire property to one occupier patently it is not an HMO. If on the other hand you let room by room to different occupants, that may be an HMO, and depending on the size of the property, and the rules of the local council, it may need either a selective HMO licence or an mandatory HMO licence. Both will entail you making alterations to the property to meet the more stringent safety and other requirements of an HMO. As a mere middleman you may not be able to make those changes since you don't own the property and, as mentioned, if it is a flat even the landlord may not be able to make the changes because of restrictions in his lease.

those are concrete reasons why you are struggling to find LL interested in your plan. Of course there are people who will be interested in youir proposal, but you are going to have to look very hard to find them, and when you do you will need to make sure yourself that your business is legal or it is you who will be prosecuted along with the LL.

szyblaszczyk

Thanks.

We're going to visit our local council shortly.

If it comes to HMO, rules in our local council says that HMO starts from 5 or more people in house. Different thing is how they count couples (us) + 2-3 people allowed? We must check it.

We'll check for sure if everything will be legal. For now just gathering information. We both work the same (late) hours so we have perfect opportunity to start that kind of business. What's more, we are planning to move somewhere in the (maybe near) future as we share house with other couple so why not rent quite big house and begin rent to rent. We opt out different wariants: 4 bedroom house, we occupy one, one for Airbnb and two others for long-term. We calculated it and find it worthy.

00ec25 wrote: »

as I posted in #11, when you let a property to people on "holiday" that is classed as a very different type of business to letting a property to someone who will use it as their home.

Short stay lets are classed as a trading activity (rather than an investment activity) and are both taxed differently and, as mentioned, viewed differently by councils. Short term lets can result in lots of people coming and going, that alters the character of an area, and therefore is of interest to local councils who may (or may not) class it as needing a change of use of the property. Therefore one that needs planning permission, because it could operate just like a hotel, and other local residents may well object to that.

as a totally separate issue, the question of HMO may also need to be considered. If you let the entire property to one occupier patently it is not an HMO. If on the other hand you let room by room to different occupants, that may be an HMO, and depending on the size of the property, and the rules of the local council, it may need either a selective HMO licence or an mandatory HMO licence. Both will entail you making alterations to the property to meet the more stringent safety and other requirements of an HMO. As a mere middleman you may not be able to make those changes since you don't own the property and, as mentioned, if it is a flat even the landlord may not be able to make the changes because of restrictions in his lease.

those are concrete reasons why you are struggling to find LL interested in your plan. Of course there are people who will be interested in youir proposal, but you are going to have to look very hard to find them, and when you do you will need to make sure yourself that your business is legal or it is you who will be prosecuted along with the LL.

szyblaszczyk

I honestly don't understand why so many of you try to discourage us for all price.

I'll clarify because I was probably misunderstood.

Our current situation: we share house with other couple and pay money somebody.
We want to rent a house and start rent to rent in our place and if everything will be fine, we are going to rent one more flat/house straight for rent to rent. If not, we just stay out of this kind of business. What on earth so bad can happen that we should just surrender, work in our job, stay silent and do nothing? We lose money because we pay few hundreds more a month to other landlord during 1 year contract?

That's obvious we want to start this business after we will be prepared. Until then we need to gather information but instead I just got from many of you advice like "DON'T DO IT, YOU WILL LOSE 100%". That's sad. I understand to warn somebody but it's too much.

bob_bank_spanker

szyblaszczyk wrote: »

I honestly don't understand why so many of you try to discourage us for all price.

I'll clarify because I was probably misunderstood.

Our current situation: we share house with other couple and pay money somebody.
We want to rent a house and start rent to rent in our place and if everything will be fine, we are going to rent one more flat/house straight for rent to rent. If not, we just stay out of this kind of business. What on earth so bad can happen that we should just surrender, work in our job, stay silent and do nothing? We lose money because we pay few hundreds more a month to other landlord during 1 year contract?

That's obvious we want to start this business after we will be prepared. Until then we need to gather information but instead I just got from many of you advice like "DON'T DO IT, YOU WILL LOSE 100%". That's sad. I understand to warn somebody but it's too much.

Apologies if I've misunderstood this post, but you seem to think everyone is negative because they don't want to see others doing well. This isn't the case at all - it is that there are very obvious regulatory and business reasons why this is very unlikely to succeed.


Regulatory - a huge %age of LLs will have a mortgage. Both BTL mortgages I've ever had have explicitly forbidden what you are describing.


Business - all you are doing is acting as a (not particularly skilled) middleman. If it really were that easy to sublet and make serious money, LLs would do it themselves. People make money by adding value to things - you are basically adding none.


I applaud your ingenuity, but like others I really don't see it taking off.

szyblaszczyk

I agree that mortgages are a problem but there really also investors who own properties without mortgage on them. However, it's not that easy to get in touch with investor and I wish to find way to do that.

We can add values:
1. What if landlord struggles every year to find tenants and he's sick of it? We can offer him long-term deal.
2. We can renovate his property a bit to make our rented property more attractive for other people.
3. If he's an investor we might be happy to rent more of his apartments and cooperate with us.
4. We don't charge landlord any money.

Why anybody can't do that? That's simple - if you do Airbnb, you need to clean rooms everyday and if you want to let rooms not whole house you need to put more effort into it. Most people want 9-5 job and no additional problems. We rent such people" property and they can forget about it and just count money month by month.

bob_bank_spanker wrote: »

Apologies if I've misunderstood this post, but you seem to think everyone is negative because they don't want to see others doing well. This isn't the case at all - it is that there are very obvious regulatory and business reasons why this is very unlikely to succeed.


Regulatory - a huge %age of LLs will have a mortgage. Both BTL mortgages I've ever had have explicitly forbidden what you are describing.


Business - all you are doing is acting as a (not particularly skilled) middleman. If it really were that easy to sublet and make serious money, LLs would do it themselves. People make money by adding value to things - you are basically adding none.


I applaud your ingenuity, but like others I really don't see it taking off.

[Deleted User]

If currently you can only afford to rent a room.., lets get to the first barrier. How are you going to pass income requirements to rent a whole property? You will have to, you know. Or are you hoping to find an 'investor' to practically 'give' you their property with no security at all. If it fails and you have a long term tenancy agreement, the LL can't even begin to evict you until you are in sufficient amount of rent arrears, which they probably will never see.

What is there that would appeal to an investor? If it was as easy as you think, they would be doing it.

You are blinded by pound signs and not seeing why this isn't commonly being done already. And you aren't listening.

Then there's all the regulation requirements that you don't even know about yet. Blinded by pound signs.

szyblaszczyk

I wrote that we have money. We save every month about 60-70% of our income.

deannatrois wrote: »

If currently you can only afford to rent a room.., lets get to the first barrier. How are you going to pass income requirements to rent a whole property? You will have to, you know. Or are you hoping to find an 'investor' to practically 'give' you their property with no security at all. If it fails and you have a long term tenancy agreement, the LL can't even begin to evict you until you are in sufficient amount of rent arrears, which they probably will never see.

What is there that would appeal to an investor? If it was as easy as you think, they would be doing it.

You are blinded by pound signs and not seeing why this isn't commonly being done already. And you aren't listening.

Then there's all the regulation requirements that you don't even know about yet. Blinded by pound signs.

G_M

szyblaszczyk wrote: »

I agree that mortgages are a problem but there really also investors who own properties without mortgage on them. However, it's not that easy to get in touch with investor and I wish to find way to do that.

We can add values:
1. What if landlord struggles every year to find tenants and he's sick of it? We can offer him long-term deal.
there is no way I would offer a 'long-term deal' to an unknown person, with no business experience, no professional acreditation and no training. Especially he he displayed anything approaching the degree of lack of knowledge of UK la you've displyed here
2. We can renovate his property a bit to make our rented property more attractive for other people.
if I want my property renovated I'll either do it myself, or employ professionals I know and trust
3. If he's an investor we might be happy to rent more of his apartments and cooperate with us.
as explined, I wouldn't agree to one property.
4. We don't charge landlord any money.
Sorry but
a) I'd still need reassuring you could pay my rent and
b) If I need help with my letting, I'd rather pay a professional (eg a letting agent) than an amateur (and I say that as someone with a low opinion of letting agents on the whole)

As well as the legal and practical issues already mentioned, no one has mentioned insurance.

My building insurer would not permit this. If one of your airb&b 'customers' burned my house down, my insurer would not pay out and I'd lose £X00,000.

And no, you taking out insurance would not help.